The Shadowlands

26.12.2011 | kyivweekly.com.ua

New business legislation tax crunch

They´re back! The dreaded tax inspections of the 1990s have been resurrected with new draconian tax legislation, which allows the tax authorities to inspect the homes and warehouses of business owners and dole out heavy fines. In addition, there is a new flat tax system and way to assess land plots, which threaten the viability of the kiosk trade, the country´s most popular way of doing business. And what is most worrying to entrepreneurs is the new law on protection of personal data, where business people will have to pay big fines for failing to provide data requested by tax authorities. One business union leader in Zaporizhzhya predicted that, instead of helping business to thrive, the laws just open up new avenues for bribery and corruption. Moreover, the effect of all this business legislation is to force entrepreneurs into the shadow economy which they so recently escaped. Since independence, business has been locked in a kind of entrepreneurship purgatory - it is not quite like neighboring Poland in adopting Western European conventions with an eye on joining the EU, yet it can no longer go back to the closed-market soviet system. But business people are not taking this lying down. Buoyed by last year´s tax demonstrations, the Chornobyl and Afghan veterans protesting, and inflamed by frustration with the closed-minded authorities, business owners staged noisy rallies across the country on December 15 protesting this latest tax legislation. Of course, rallies attract the riot police, but the message to the authorities is clear. Despite the harsh consequences - police beatings, jail time and a dressing down by the authorities - the public has crossed a line and is no longer afraid to make themselves heard. In fact, their voice is growing louder and spreading from sector to sector. These rallies have taken on a new dimension by being coordinated across the country. The reaction by the authorities to protesters -bans on public gatherings and a heavy police presence, has had the opposite effect, as it would when the authorities press Ukrainians too far. Pressure is building and a few more government missteps could see the pressure cooker explode.

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